AIG Trustee Helps Hedge Funds In Offshore Tax Havens

John Carney

May 13, 2009, 3:55 PM

One of the trustees appointed by the New York Fed to oversee AIG also works as the chairwoman of the Butterfield Fulcrum Group, a Bermuda based hedge fund services firms that administers hedge funds based in tax-havens such as the Cayman Islands and the Channel Islands.

The AIG trustee is Jill Considine, a long-time banking industry insider who was once the New York State Superintendent of Banks, and who served in a variety of high profile positions before joining the Bermuda-based firm in 2008. Her company, Butterfield Fulcrum Group, maintains offices in low-tax locations including the Cayman Islands, the Channel Islands and Ireland. Considine and the other two trustees were put in place by the New York Fed in a written contract signed on January 16 - before Obama was sworn in - that gives them enormous authority over AIG and independence from the Treasury and the Federal Reserve. They each receive a $100,000 annual salary...

It is particularly ironic given the president's comments about the offshore industry last week. "For years, we've talked about shutting down overseas tax havens that let companies set up operations to avoid paying taxes in America," the president said at the time.

It gets even richer. The Butterfield Fulcrum Group acts as the registrar for several firms that list their address in a building in the Cayman Islands known as "Ugland House." That's the very place mocked by Obama in his speech for supposedly housing 10,000 companies.

"Either this is the largest building in the world, or the largest tax scam in the world," Obama said. "And I think the American people know which it is. It's the kind of tax scam that we need to end."

Of course, none of this has anything to do with Considine's ability to oversee AIG. It's not even an "appearance of a conflict of interest" story. It's more of a confluence of politics story: anti-AIG politics meeting anti-off-shoring politics. If anything, Considine's familiarity with hedge fund operations might make her good at sleuthing into AIG's business practices.

But never mind. You're meant to be shocked out of such thoughts. Financial professionals, especially people who have dealings with hedge funds, are public enemies. Begin the two minutes of hate now. And just in case you missed the point, Politico quotes someone who makes it perfectly clear.

"The offshore tax haven hedge fund industry could not exist without administrative firms like Butterfield Fulcrum Group," said a former hedge fund executive. "It's shocking that they picked an executive who is facilitating the offshore hedge fund industry to run AIG when AIG is the poster child for all of these excesses."